Expectation Formation in Dynamic Market Experiments

PhD Thesis# 450
Author:
Peter (P.) Heemeijer
Supervisor(s):
Prof. C.H. Hommes, Prof. J. Sonnemans, Dr. J. Tuinstra
Date:
2009-01-29

Abstract

People often make mistakes when predicting economic variables such as prices. It is important to understand how these predictions are formed, since people's expectations have a large impact on the development and stability of economic systems. In this thesis the expectation formation of individuals is analysed using experimental methods. Several well-known economic models have been recreated in a computer laboratory, with recruited individuals taking the role of forecasters. Based on the experimental results, the thesis answers questions about the kinds of prediction rules individuals use, the degree of coordination among individuals' predictions, and the effect of expectation formation on economic stability.

Publisher of the TI-theses is: Rozenberg Publishing Services